Deepak's Musings #161: ⚙️ The Value Creation Playbook, learnings from 150+ consumer brand exits

⚙️ Recap: The Value Creation Playbook: Learnings from 150+ consumer brand exits

DSG Consumer Partners' MD Hariharan Premkumar and Partner Bain & Co.'s Partner Navneet Chahal analyse exits in consumer brands in India over the past 15 years to understand the value creation trends. Here are their four key takeaways:

#1 The most common exit route for consumer brands is Mergers & Acquisitions with strategics, driven by an increase in early-stage acquisitions at lower valuations

#2 Consumer brands’ exits take time and are not unicorn outcomes

#3 Despite exit at lower enterprise valuations, high founder stake drives meaty founder value

#4 While the highest exit activity is seen in Food and Beverage, Beauty and Personal Care, and Apparel, revenue multiple is determined by the fundamental health of a business

The story below goes in more detail.

🛍️ Insurgent brands will continue to win market share

I recently spoke to Mangalam Maloo at the CNBC-TV18 Global Leadership Summit 2024 about why insurgent brands are continuing to win market share from the incumbents,

🐱 Nestlé Purina's first Asian Unleashed event spotlights rising stars in pet innovation

Last week, Nestle Purina hosted its first Unleashed event in Asia: Unleased Singapore. It was fantastic to see so many entrepreneurs building pet-focused businesses from across the region come together. Rishika Chandan of Venturi Partners and I had the hard job of judging the pitch competition and listening to 10 five-minute pitches from amazing founders, covering everything from pet food to dog yoga to vet clinics to Ayurveda-based products, from across the region.

The top honours went to TABPS Pets, a Coimbatore-based startup revolutionizing pet nutrition by incorporating Ayurvedic ingredients into pet food formulations.

In second place was RABO Inc (Catlog), a Japanese startup developing innovative IoT solutions for cat care. Their product line includes smart-collars and weighing scales designed to help pet parents monitor and maintain their cats' health more effectively.

The pet industry is experiencing unprecedented growth, with an influx of exceptional entrepreneurs launching innovative pet-focused ventures. As investors at DSG Consumer Partners, we've recognized this potential early on, leading to our strategic investments in Supertails, Smylo, and Perromart over the past decade. Based on current trends, we believe we're witnessing just the beginning of a remarkable surge in pet ownership and pet-focused consumerism in our region.

🐶 Profile: Supertail’s Varun Sadana

On the topic of pet parenting, meet Varun Sadana, co-founder of Supertails. He turned his deep love for pets into a thriving digital-first platform that's reshaping how India cares for its furry friends. He's not just selling pet supplies - he's building a comprehensive ecosystem combining commerce, veterinary care, and behaviour training while riding India's explosive pet care market growth.

🍦 HUL wants to focus on high-margin segments, so ice cream is out

Hindustan Unilever (HUL) is demerging its ice cream business into a separate listed entity, following parent Unilever's global strategy. Despite ice cream being a growing market in India, this move reflects HUL's desire to focus on its more profitable core businesses—beauty, personal care, and home care. The ice cream unit, worth Rs 1,750 crore ($200 million), represents only 3% of HUL's revenue and comes with high investment needs and lower margins (10% vs 25% company average).

Remember, as an independent company, it will be one of India’s largest ice cream businesses.

🇮🇳 India’s top brands by categories

Last month, TIME and Statista launched the inaugural list of the World's Best Brands based on consumer surveys conducted in countries worldwide, beginning with the U.S., India, and Brazil. In India, 13,500 consumers were surveyed about brand awareness, social buzz, likability, usage, and loyalty.

The inaugural list includes the top 5 brands in 66 different categories. It is fantastic to see insurgent brands like boAt, Sugar, Paperboat, Country Delight, Mamaearth, and others on the list alongside the more prominent Indian and global brands.

⚡ Deep dive with Zepto’s Aadit Palicha

This is a must-read for anyone and everyone building insurgent brands in India, given how QCom is changing not only the distribution playbook but also, more fundamentally, consumer behaviour.

As I watch from the sidelines, I am thinking about how Zepto and the other QCom players will use their data to launch private label or their own insurgent brands. Will consumers become channel loyal vs brand loyal, and in which categories? Fun times to be a consumer investor or entrepreneur.

📰 Other consumer-related news: deals, funding, branding and more

Consumer funding and deal news that caught my attention